U.S. IS NEGOTIATING TO EXTEND LEASES OF 2 BASES IN PHILIPPINES

Secretary of State George Shultz said Monday that keeping the two contested U.S. military bases in the Philippines was "clearly the most desirable option" and added he hoped to strike a deal extending their leases.

Philippine negotiators are meeting with U.S. officials in Manila on the 41-year-old treaty covering Clark Air Base and Subic Bay Naval Base, the largest U.S. bases overseas.The Philippines is seeking an annual compensation of more than $1 billion under the current review of the treaty, which expires in 1991. The United States has threatened to pull out if the Philippines insists on the rent.

"If we are forced to leave the bases in the Philippines, we do have other options," Shultz told reporters in Jakarta Monday before flying to Manila for two days of talks.

But he said keeping the bases in the Philippines "is clearly the most desirable option and so we will try and work it out so that that option is pursued," Shultz said at the end of his three-day visit to Indonesia.

Shultz will meet with President Corazon Aquino and other government and congressional officials during his visit to the Philippines, which receives $180 million in annual aid under a five-year pact ending in 1989.

After visiting the Philippines, Shultz is scheduled to travel to Hong Kong, Beijing, Seoul, Tokyo and the Marshall Islands.

Shultz, who has visited Thailand, Malaysia and Indonesia on his nine-nation tour of Asia and the Pacific, told journalists that there was strong support for a continued U.S. military presence in the region.

"What I have found in my meetings here and with the Australians and the Japanese and others is that people put great significance and importance to the notion that the U.S. is here and a part of the strategic equation along with other countries," he said.

Shultz met with the foreign ministers of Australia, Japan and other allies last week when he was in Bangkok for consultations with his six counterparts in the Association of Southeast Asian Nations, or ASEAN.